My Trading Game Plan Revealed - 02/10/2026: Bad News Is Good News Rally Masks Market Weakness

The economic landscape is shifting beneath our feet, and the market’s reaction this morning provides a textbook example of the "bad news is good news" paradigm that often dominates late-stage market cycles. Following a retail sales report that came in slightly weaker than expected, stock futures—which had been under pressure—staged a reversal to trade flat to slightly green.

In this morning’s My Trading Game Plan show, Gareth Soloway, Chief Market Strategist at Verified Investing, dissected this counterintuitive market behavior. The logic is rooted in the bond market: weak economic data drives yields down, fueling speculation that the Federal Reserve may be forced to cut interest rates sooner rather than later. However, as Gareth warned, while the market may rejoice in the prospect of cheaper money, the underlying reality of a slowing economy poses significant risks to corporate earnings.

The Macro Paradox: Bad News as a Bullish Catalyst

The immediate reaction to the retail sales data highlights the market's current fixation on interest rates over economic health. When the data hit the wires, showing a contraction in consumer activity, the 10-year Treasury yield immediately broke support levels on the intraday charts.

"A weaker economy means lower rates, and that is a good thing for the stock market in the near term."

This dynamic creates a precarious environment for investors. The market is effectively cheering for economic deterioration because it alleviates the pressure of high borrowing costs. We saw this play out in real-time on the 10-minute chart of the 10-year yield, which dropped significantly in the 30 to 50 minutes following the data release.

However, this narrative faces a critical test in the days ahead. We are entering a heavy data week that could either validate or shatter the current market thesis:

1. Nonfarm Payrolls: Tomorrow morning at 8:30 a.m. ET, the jobs data will provide a clearer picture of labor market resilience.
2. CPI Inflation Data: On Friday, the Consumer Price Index will reveal whether inflation is truly tamed.

Gareth pointed out a crucial nuance regarding the upcoming CPI print. While 30% of the CPI calculation comes from rent and housing—which have been ticking down—real-world costs for consumers are rising. From food at the supermarket to precious metals, live cattle (meat prices), and oil, inflationary pressures remain palpable. If the housing component masks these rising costs, the headline number might look favorable, but the reality for the consumer remains challenging.

Index Technicals: The Burden of Proof

Despite the relief rally in futures, the technical posture of the major indices remains precarious. Gareth emphasized the importance of objective chart analysis over emotional narratives, noting that while recent days have seen bounces, the broader downtrends remain intact.

S&P 500: Trapped in the Channel

The S&P 500 has enjoyed two days of upward movement, with a near 2% gain followed by a 0.5% move. While bulls are quick to declare the resumption of the uptrend, the technicals suggest otherwise. The index remains firmly below key resistance trendlines—specifically the white and yellow lines on Gareth’s chart that form the upper boundary of a parallel channel.

This channel has historically kept the market in check at both highs and lows. Until the S&P 500 can decisively reclaim the zone above these trendlines, the probability favors a rollover. As Gareth noted, "The charts continue to point towards a negative signal. In other words, probability-wise says that at some point in the next week, week and a half… the markets will likely… start to roll over again and head lower."

Nasdaq Composite: The Path of Least Resistance

A similar structure is visible on the Nasdaq Composite. A parallel channel connecting the lows of January 2023 and April 2025 with the bull market highs of 2021 and October 2025 paints a clear picture. The index has broken down below the internal trendline, and until proven otherwise, this breakdown signals the beginning of a potentially larger move to the downside.

Dow Jones Industrial Average: The 50,000 Milestone

The Dow Jones Industrial Average recently pierced the psychological 50,000 level, a historic milestone. However, price action is currently contending with a trendline dating back to 2023. Despite the pierce of the round number, the index has yet to prove it can sustain a breakout above this resistance.

This brings us to a core tenet of technical analysis: Make the market prove itself.

"As a technician, you always make the markets prove themselves before you believe it. In other words, without it breaking through, the path of least resistance is to the downside."

Human emotion urges us to believe that every dip is a buying opportunity, a sentiment reinforced by years of bull market conditioning. However, history—from the dot-com bubble to the 2007 financial crisis—teaches us that when technical structures break, the "buy the dip" mentality can lead to catastrophic losses.

Tactical Opportunities: The Day Trader’s Watchlist

While the macro outlook warrants caution, volatility creates opportunity. Gareth outlined several specific setups for the trading session, distinguishing carefully between day trades (short-term intraday moves) and swing trades (multi-day or week holds).

Spotify: Fading the Relief Rally

Spotify has surged recently, trading around $468 this morning. However, looking at the daily chart, this move appears to be a relief rally within a longer-term downtrend. Gareth identified a specific level for an intraday short opportunity: $500.

This level coincides with a major pivot low and secondary support tests from previous price action. If the stock pushes into the $498-$500 range, the technical memory at this level is likely to trigger a rejection. Note that this is strictly a day trade; the stock is too beaten down to justify a swing short at these levels.

Datadog: Gap Fill Resistance

Similarly, Datadog is experiencing a bounce, trading near $129. Like many cloud and software stocks, it has been decimated recently. For traders looking to fade this move, the key resistance zone lies between $140 and $143.

This area represents a gap fill and a double top formation. The confluence of these technical factors makes it a high-probability zone for intraday resistance.

Moody’s (MCO): Playing the Oversold Bounce

On the long side, Moody’s (MCO) has been crushed on earnings. The daily chart shows a sharp drop, but not necessarily a long-term downtrend breakdown yet. The stock is approaching a clear double bottom support level at $379-$380.

"Every one of you should be able to see this. You have your double bottom right here around $379. That's going to be the tradable level for me."

A flush into this level offers a viable day trade long entry. However, swing traders should exercise caution, as a secondary support level for a longer-term hold doesn't appear until closer to $360.

Harley Davidson (HOG): The COVID Lows

Harley Davidson is down roughly 7-8% this morning, trading near $18. The stock has been in a severe long-term downtrend. Gareth identified a significant historical level for a potential bounce: the COVID lows around $14.65.

This level represents extreme pessimism—the price where investors believed the world was ending in 2020. Such historical extremes often provoke a reaction. For swing traders, a higher risk entry exists around $17.50-$17.75, but the $14.65 level remains the definitive "line in the sand" for a strong bounce.

Credo Technology: The "Scene of the Crime"

Credo Technology is popping on AI-related news. After a significant breakdown, the stock is retracing upward. Gareth applied a simple yet effective technique: identifying the breakdown point where support became resistance—often called the "scene of the crime."

By connecting multiple pivot lows that previously acted as support, the trendline now extends to roughly $154-$155. If the rally reaches this level, it represents a retest of broken support from the underside, making it a prime location for a short trade.

Precious Metals: The Danger of the Bear Flag

The precious metals market is currently exhibiting a deceptive pattern. Both gold and silver had strong sessions yesterday, but they remain trapped in well-defined ranges. This range-bound action often lures retail traders into a false sense of security while institutions distribute positions.

Silver’s Precarious Position

Silver is oscillating between support at $70-$71 and resistance at $90-$91. While a $20 range offers trading opportunities, the broader structure is concerning. The chart is forming a potential bear flag—a sharp move down followed by a sideways consolidation.

"If this continues and doesn't break… this favors an eventual move down to $50 to $54 per ounce."

Unless silver can break out above the $91 resistance, the consolidation suggests energy is building for a continuation of the downward move.

Gold’s Resistance Ceiling

Gold is showing slightly more relative strength but faces formidable resistance just under $5,100. A break above this level could open the door to $5,400, but like silver, the current consolidation after a drop mimics a bear flag structure. Traders should be wary of getting chopped up in the middle of the range and instead wait for a decisive break or a test of the extremes.

Bitcoin: Micro Bull vs. Macro Bear

Bitcoin presents a fascinating dichotomy between timeframes. On the micro (short-term) chart, the cryptocurrency is forming a bullish flag pattern. This setup suggests a potential near-term rally, possibly taking the price back above $80,000.

However, zooming out to the macro view reveals a different story. The larger pattern remains bearish, dominated by a massive head-and-shoulders structure and the memory of the collapse from the $129,000 highs.

Gareth reminded viewers of the sentiment at the top: "When Bitcoin was at $129,000, how many of us heard it was going to $250,000 from gurus by year-end? But the charts didn't say that."

At the peak, Bitcoin was hitting a major trendline extending back to 2017. The rejection from that level and subsequent 50%+ drop to $60,000 validates the power of long-term technical resistance over euphoric narratives. While a short-term trade to $80,000 is viable, the macro trend suggests the path of least resistance remains lower until proven otherwise.

Oil: The Contrarian Bull Case

In contrast to the metals, Gareth remains bullish on oil. The commodity is currently grinding higher, and a break above $66.50 should trigger a rapid move toward $70.00.

This bullish stance has been maintained for months, defying widespread narratives about supply gluts. It serves as another reminder that price action often precedes news. The wedge pattern breakout identified months ago continues to play out, rewarding those who ignored the headlines in favor of the chart.

The Psychology of Probability

Perhaps the most vital lesson from today’s session is the proper mindset regarding trading success. Trading is not about predicting the future with 100% accuracy; it is about managing probabilities.

"If you have a 70% probability of winning, it still means you have a 30% chance of losing… But you know what? That's all-star level."

Many retail traders struggle with the concept that a "good" trade can still lose money. If a setup meets all your criteria and has a 70% historical success rate, taking the trade is the correct decision, regardless of the outcome of that specific instance. Over a series of 100 trades, the math will work in your favor.

This mathematical approach helps mitigate the emotional rollercoaster of trading. When you accept that losses are simply part of the statistical distribution—the "cost of doing business"—you can execute trades without fear or hesitation.

Conclusion: Navigating the Data Minefield

As we move through this week, the interplay between economic data and market reaction will be critical. The "bad news is good news" trade may support stocks in the very short term, but the technical damage on the S&P 500 and Nasdaq suggests that the broader correction is not over.

With the 10-year yield hovering at support and the dollar retracing to a perfect 61.8% Fibonacci level, the stage is set for volatility. Whether you are day trading the relief rallies in tech or watching the support levels in commodities, the key is to let the charts guide your decisions. Ignore the noise, trust the levels, and remember that in the long run, price is the only truth that matters.